Middle Tennessee Real Estate BLOG

Check out this new Single-family property that I just posted on my Web site. It is at 2687 Sutherland Drive in Thompson’s Station. This Single-family property has 4 bedrooms and 3 baths.

April 8, 2008 (Franklin, TN)”The Williamson County Association of REALTORS ® today announces the sale of homes statistics for Williamson County, Tn. for the month of March. There were 273 residential and condominium closings reported for the month, according to figures provided by RealTracs Solutions, the multiple listing service used by REALTORS ® in the Middle-Tennessee area.

Compared to March of 2007, the residential home closings decreased 29 percent and the median prices for residential homes decreased by 1 percent. Days on the market (DOM) for residential homes increased by 16 days or 24 percent as compared to March 2007. Condominium closings decreased by 43 percent. The median prices for condominiums increased by 15 percent and days on the market also increased by 41 percent (17 days) compared to March 2007.

March 2008

March 2007

March 2006

Number 10

I can’t make my house payments, but I do have an ability to pay back all or part of the negative equity. Also, I want to preserve my credit score…is a short sale right for me?

Probably, not. In cases where the seller can pay back all or part of the negative equity (usually to the 2nd lien holder), it makes sense for them to work out a repayment plan. The lender will then release the lien and allow the home to close.

Number 9

If I pay mortgage insurance and default on my loan, why wouldn’t that cover the deficiency amount?

The mortgage insurance is not there for your protection, just the mortgage lender’s.

Number 8

Do I have to have my home “Approved” by the lender prior to offering it for sale as a short sale?

No. Technically speaking there is no such thing as being “Short Sale Approved.” The actual approval only happens with an accepted offer.

Number 7

I just missed a payment and I know I will miss more…how long does the foreclosure process take and is there time to do a short sale?

The foreclosure process takes differing times depending on your state.  In the Midwest a foreclosure can take over a year. In Tennessee the process can take as little as 28 days once you are in default. There is also not a redemption period in Tennessee so once the property is foreclosed it is over.

Number 6

Will I still have to pay property taxes if I do a short sale?

Property taxes will always have to be paid as part of any accepted short sale. Whether it’s you or the lender, it depends on their policies and the specific agreement you reach while negotiating the short sale.

Number 5

I owe more than my home is worth and I can’t make the payment. Do I have to somehow qualify for a short sale?

The simple answer is NO. If someone can’t make their payment and they are otherwise insolvent, they qualify for a short sale. Note: insolvent simply means their total debts are great than their assets.

Number 4

Do I have to pay income taxes…I have heard that I will get a 1099. Will the loss the bank takes be treated as a taxable gain to me…the seller…is this true?

It WAS true, now it’s not. Consult your Tax Attorney or Qualified CPA.  Very recently the tax law was modified and now most people who do a short sale will have no taxes due.

Number 3

How do you, my listing agent get paid…who pays your commission?

The bank will pay the commission along with all the other usual closing costs.

Number 2

Do I have to miss a payment to do a Short Sale?

No. Late last year most major lenders started accepting short sale offers from sellers who have never missed a payment.

Number 1

I want to do a short sale and have a 2nd mortgage, does this make me ineligible?

No. Both of your lenders will need to be satisfied in some way to complete the short sale. If your first lender will be paid off by the sale, then you just negotiate the terms with the second lender. Most short sales do involve 1st and 2nd lien holders.

Tennessee Makes News as Affordable Market

A newly-released study by Bizjournals.com ranked the 50 largest

metropolitan areas in the U.S. as to housing affordability. Tennessee

had TWO cities make it into the top 20!

Memphis ranked 9th, and Nashville ranked 16th!

The study looked at median household income per month and the median

total housing payment per month – for each of the 50 markets – to

compute total housing payment as a percentage of household income. This

showed 22.43% of income spent on housing in Memphis. In Nashville, the

figure was 24.15% spent on housing; in Los Angeles the least affordable city? 75.46%!

[SOURCE: Bizjournals.com]

Realtors ® from across the state visited with their legislators Wednesday seeking support for a variety of legislation. Attending Realtors ® included TAR President Mike Gaughan, a partner in three RE/MAX offices in Sumner County, and Jim Gibbs who owns the Career Institute and Ideal Realty. The Realtors ® spent considerable time with their representatives discussing the issues.

One bill being supported by the Realtors ® deals with the regulation of scrap metal dealers. Since last year Realtors ® have led the fight to stop the epidemic of scrap metal and especially copper theft. “This year we continue our support with a coalition of the Homebuilders, law enforcement and industry”, said Gibbs. “Like many Realtors ®, I have experienced the frustration of having new homes under construction stripped of its wiring causing a major expense for the builder. That expense is just passed on to the consumer”, added Gibbs.

Gibbs pointed out that the problem is not restricted to just copper wire. He said that several metal historic markers in Cannon County have been stolen and they have probably been sold as scrap metal. Gibbs who is also one of Cannon  County’s Constables points out that the main components of the bill are to make it more difficult for thieves to turn scrap metal into quick cash and remain anonymous. The bill would:
·  Require registration of scrap metal dealers.

·  Persons selling scrap metal must present a valid photo ID and provide a thumbprint.

·  Scrap metal dealers will have to keep records of each transaction including name, license plate number and vehicle information of each seller of scrap metal.

·  Requires scrap metal dealers to present a “voucher” for payment for copper and other precious metals in an effort to break the link between metal theft and the illegal drug trade.

·  Local governments may impose additional restrictions depending on the level of the problem in their area. (Local ordinances in Memphis are already in effect and seem to be working to curb the problem.)
Gibbs noted that the bill has already passed the Senate and is headed for the House Floor.

It is also the position of the Tennessee Association of Realtors ® that the County Powers Relief Act of 2006 should be allowed to remain un-amended in an effort to address its viability in 2010 as the legislation allows. “We as Realtors ® further oppose any taxes or fees that could inhibit home sales in Tennessee”, added Gibbs.

The Tennessee Association of REALTORS ® is a 27,000-member trade organization committed to providing for development of our communities and protection to Tennessee homeowners.

The current housing market, a bust or a correction…it depends on which part of the country and what side of the table you are in or on! For home owners who purchased homes in “Hot Markets” in the previous 24 months it looks like a bust. For the owner who bought 25 to 96 months ago it should be a correction that is if you have not been using your equity like an ATM Machine.   Buyers in some markets will realize some Great Deals in the coming months while Sellers will see the ‘Instant Equity Machine” return to its original design…a home to live in and raise your family.

The truth is we actually do need this type of correction in many markets to help or overall economy. At the previous rates of growth a house bought in the year 2000 would be worth $432,000 by the year 2012 had this continued…Now if it were my house that would seem great except for the fact the house I now want to buy would cost $894,000 in 2012. Supply and demand is a good thing and we need to realize that in the interim we should embrace the fact that prices are stabilizing, the sub prime issue is being addressed and yes credit is tightening.

Americans remain convinced that buying a home is a good long-term investment. That’s just one of the findings from the 2007 National Housing Pulse Survey, released during the annual REALTORS ® Conference & Expo.
The survey measures how affordable housing issues affect consumers. This year’s results show that nearly nine out of 10 consumers believe that buying a home is a good financial decision. Fifty-nine percent of respondents also agree that now is a good time to buy a home; that number is even higher (64 percent) in areas of recent home price declines.

“Owning a home continues to be a good, long-term investment, and most consumers understand that,” said National Association of Realtors ® President Pat V. Combs, of Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt. “This new survey clearly shows that people believe in the value of homeownership and know that owning a home is one of the best ways for most families to build a nest egg.”

This year’s survey shows that Americans are more concerned about obtaining a mortgage and having enough money for down payment and closing costs than they have been in five years of polling. Nearly six in 10 respondents believe it’s difficult for people in their area to obtain a fair and affordable mortgage. More than eight in 10 say having enough money for down payment and closing costs are obstacles for home buyers in their area, up 17 percent from 2005. Sixty-three percent also think the mortgage approval process is an obstacle, up 13 percent since 2005.

Most agents who represent buyers purchasing an REO property are not aware of the Per Diem clause in almost every, 98%, of the amendments to the contract that are provided by the Lender. This 3 sentence statement can become a very big issue when the closing date arrives, here’s how. Two weeks ago I had an REO listing that was set to close on Thursday 11/15/07. Three days before closing, the Buyers Agent needed to have the REO Lender agree to allow the Buyer to pay for their own Title Policy ($1275.00) and have the REO Lender pay the same $1275.00 towards the Buyer’s pre-paids. Well that actually turned out to be a no brainer because all the REO Lender cared/s about was their Net so the REO Lender agreed to the change the very next day. Now that I have set the table here comes the meat of the article…On the day of closing the Buyer and the Buyer’s Agent arrived at their Title Company to close their side of the transaction. To their surprise the Buyer’s bank had not agreed to this new scenario concerning the $1275.00 being moved to pay the Buyer’s pre-paids on the HUD-1. After much anguish and pleading the Buyer’s Lender agreed to allow the $1275.00 to be applied to the mortgage fee but the paperwork would need to be re-done and the closing would have to be delayed until Monday 11/19. On Monday 11/19 the Buyer could not get off work in time to make it to the Title Company so it now came to close on Tuesday 11/20 at 9:00 a.m. and it in fact closed promptly. Did I mention something earlier about a Per Diem?  In this case the per diem was $150 per day charged to the buyer until the property closed, OUCH!!!The Buyer’s Agent called with his chest puffed out saying they were not going to pay the $750 fee and that was final, or was it? See the Buyer’s Title Attorney interrupted and pointed out they had already deducted the $750 from the Buyer’s Agent Commission. He went on & informed him that it was his fault as the Buyer’s Agent that it did not close on time because he had not sought the new lender’s approval and was further liable for any costs that the Buyer may have had to incur during those 5 days including the motel room and food, OUCH, OUCH OUCH!!!!!1  So if you have never worked an REO as a Buyers Agent please be forewarned that thereAre a few things that are different about this type of transaction…. As for the Buyer’s Agent in the story he called and asked me why I did not tell him about the Per Diem? My response was, we did and you said you could close tomorrow and it would not be a problem…..OUCH, OUCH, OUCH, OUCH !!!!   Thought Word & Deed…we as agents never know what a buyer can or will do before closing so please be careful what you promise with your statements!  The agent in this case netted $227 before his office split; he went on to say I never knew they would really charge us for that fee…To answer a question before it is asked…No the REO Lender does not pay the Buyer if the REO Lender can not close on time!

receive phone calls from real estate investors from time to time on properties I have listed on the Internet and one thing rings true about all of these Investors…. They have been sold on the disinformation being poured out by the so called real estate investment guru’s who last year were selling some other form disservice to anyone who would come to their seminars and buy their materials…. So if you are an investor seasoned or novice then look at the issue from the  lender’s prospective….A couple of points you need to know when truly making an offer on a foreclosed property…1.             Cash is not king!  A mortgage company does not frown on a mortgage. When you think about it that  makes sense,  once you look at from  a mortgage company’s point of view. They only care about the NET2.             A quick decision in most cases is not possible, so do not threaten to walk if you do not get an instant response. The typical  answer in anything under 10 days is good when dealing with a lender.3.             It’s all about the NET so inspections & warranties  paid by the buyer increase the net and  help the  sales price4.             The cost of the Buyer’s agent is considered in the sales price and yes banks like you to have professional representation to protect your interest in the contract. Banks like to be covered and a Buyer’s agent is a good thing!5.             It takes time to remove all of the encumbrances and liens off of a deed so expect 21 to 30 days to close, not tomorrow!6.             Yes in multiple offer situations a lender may consider an owner occupant over an investor. Remember that lenders usually have numerous properties in any given area or neighborhood & protecting the property value is a consideration. 7.             Repairs….not happening in 90% of any REO sale, unless the repair would prevent more or continued damage to the property. What your inspector or contractor says really does not influence the bank’s decision. That information is for your decision.8.             The first offer is rarely accepted unless it is of course for full price so be ready to counter and re-counter offersWhen you take these items into consideration you will see that it is possible to buy an REO property and obtain a good deal if you work with the guidelines banks like to follow. One other consideration; With the number of foreclosed houses on the market there is pressure to sell them but  Lenders have hundreds of deals to consider ever day so keep your prospective and realize if you “Walk”  if you do not have an answer by 5:00 today…they don’t care. 1.             Be agreeable and willing to work with the Lender or Asset Company2.             Be patient with the response  time and how you respond in king to the Lender3.             Be prompt with your information even if they are not prompt4.             Be  realistic with your pricing and what your costs will be, exaggeration kills many good deals   5.             Be flexible  closing dates  next week is not realistic and the day after tomorrow is not being flexible6.             Be willing to walk away and willing to re-visit their offer  if is remains available7.             Remember banks are in the business to make money not lose money so they work with people who work with themThe really good investor has patience to seek out opportunity  and the ability to pounce when it arises….